Artists and Tax Law

Have you been wondering why is it so difficult to get artists to donate to your organization? Artists cannot receive a tax deduction for the value of their art. For example, a painter who has spent months to finish a painting and could sell the painting to a customer for $30,000 can only get tax deduction for the few hundreds that she spent on purchasing the materials for her painting if she decides to donate it to a nonprofit organization.

This policy has a story in history when a president misused the rule and took advantage of the policies to avoid paying tax. Richard Nixon donated his papers and manuscript papers to a library, and he received a contribution value for over one million dollars for his papers. After that date, Congress changed the rules, so since 1969, artists could only get tax deduction for the cost of the materials that they use, not the fair market value of the art.

Congress has not done anything to correct this unfair policy. The best place for artists to display their art is at the museums because they can be viewed by a large number of people and used for educational purposes. When artists cannot receive a fair market value deduction for their donation, they will sell their art to individual collectors instead of donating them to institutions. Therefore, we, as a general public ,will miss on seeing those pieces of art because they would be owned by individuals and kept at their private home. This limits the accessibility of visual art.

The second major issue is that this policy is not fair in a way that treats the art creator/artist different from the art collector/buyer. The artists who are indeed the main owner of the art objects cannot claim a tax deduction for the fair market value, but if a non-artist who has purchased the art previously decides to donate the item to an organization can claim a full amount of fair market value for their deduction.

It is time that Congress take this issue under consideration and make major revisions to this policy.